Social Capitalists

The top 20 groups that are changing the world.

By
Cheryl Dahle

Every so often, our expectations of what is possible change. A new idea, an inspired invention, a resourceful person or group appears and alters the way we think about the world. Suddenly, sending a man to the moon, sprinting a mile in under four minutes, replacing a human heart with an artificial one, are no longer laughable propositions. We owe every quantum leap in our evolution as a society to those sorts of catalysts.

You are about to meet 20 organizations that are in the business of changing expectations. They reshape reality - so that poor kids can attend college, so that people in the destitute corners of the world can get better health care, so that victims of human-rights abuses can be heard. Most of us see the world's most daunting problems as impossible challenges. But these groups see the world's problems as just . . . problems, ones that can be fixed with the right ideas and enough passion. And they see how the systems that produced those problems can be reinvented. So they get to work.

These groups and leaders are neither idealistic dreamers nor neo-hippie do-gooders. They are entrepreneurs in the truest sense of the word. They are adept at marshalling resources behind an idea, at creating organizations that operate both efficiently and effectively. They apply sound management tools and discipline, and they demand results.

They are the winners of our inaugural Social Capitalist Awards. Fast Company, with considerable assistance from Monitor Group, the global consulting firm, has spent months assessing entrepreneurship in the social sector. We have measured organizations' actual innovations and their impact. We have gauged their aspirations and their sustainability. This endeavor is the first to make these types of quantitative comparisons across a group of organizations with such diverse social missions and business structures.

At first glance, these groups, whose missions range from teaching preschoolers to read to helping low-income families buy their own homes, seem difficult to compare. But our goal was to judge not the relative social worth of these organizations, but rather their excellence as entrepreneurial endeavors. What we found surprised us: organizations changing the world in part because of their commitment to excellence in business. And though their work is inspiring, that's not why we're writing about them. They are also management models worthy of emulation. Consider them as we did, using five essential criteria:

Entrepreneurship.

They are masters at mobilizing the resources, whether human or monetary, to drive their plans. KaBOOM!, for example, has perfected the impressive feat of sweeping into a neighborhood with an army of volunteers and building a playground, in Amish barn-raising style, in a single day. It does so by bringing varied community interests, including corporate sponsors, to the table months beforehand.

Innovation.

They have practices in place that support continual creative renewal. At Program for Appropriate Technology in Health (PATH), scientists and world health experts foster relationships with for-profit companies that can help create new products for the developing world. One result: a sterile delivery kit that allows women to give birth at home but greatly reduces the risk of infection.

Social Impact.

These groups don't fall back on feel-good brochures to prove their worth. They quantify the difference they make. College Summit has invented a brilliantly effective program to help low-income kids prepare for college: 79% of its target students enroll in college - nearly double the rate of seniors nationally at the same income level. College Summit's founder, J.B. Schramm, masterfully articulates the links between college education, improved personal economic opportunity, and flourishing communities.

Aspiration.

Their plans are ambitious, but rooted in rigorously supported projections. Jumpstart, a group that recruits college kids to teach preschoolers to read, reaches 6,000 3- to 5-year-olds with its services. Its target for 2006 is 25,000 tots. Because Jumpstart's business model ensures that each additional tutoring hour will cost just $3.57, that growth goal is extremely realistic.

Sustainability.

They don't count solely on the kindness of foundations or the whim of government. At Rubicon Programs Inc., women and men who were once homeless are now pastry chefs, whipping up chocolate ganache cakes for a bakery business. The bakery and a landscaping operation have launched hundreds of careers - and help fund the array of social services Rubicon provides to get more homeless people off the streets.

As a group, these winning organizations present a picture of sometimes stunning vitality. They expected annual revenues to grow by an average of 29.2% in 2003. Their employment was growing by 172%. Twelve of the 20 have some revenue-generating strategy similar to Rubicon's. And 13 of 20 spend 10 cents or less on fund- raising for every dollar they raise.

Our exhaustive study began with 117 social entrepreneurs identified by an expert panel as "the best of the best" in the arena of social entrepreneurship. We evaluated audited financials and tax returns, business plans and grant proposals, online surveys of executive directors and board chairs, and in-depth interviews with those executive directors and with outside experts.

Why did we do all this? Because the phenomenon of social entrepreneurship has emerged rapidly in the last 15 years as a force to be reckoned with - and, so, to be held accountable. Fueled by the economic boom of the late 1990s and by the widespread conclusion that governments were failing to solve social problems, citizens have taken up the tools of business to fight for change - in the circumstances of individuals and in the systems themselves.

Though no exact estimate exists on the size of the field, tax records indicate that the number of nonprofits grew by 60% between 1989 and 1998. About 250 colleges and universities offer courses or degree programs for students interested in jobs with a social focus. Most major MBA programs now offer courses or concentrations on social entrepreneurship. And there are 42 funds or foundations that invest primarily in social entrepeneurs, according to a 2002 study by Venture Philanthropy Partners.

It's an entrepreneurial revolution to rival the dotcoms - yet few, until now, have paid attention. David Bornstein, author of How to Change the World: Social Entrepreneurs and the Power of New Ideas (Oxford University Press, 2004), a book profiling the field and its history, puts it succinctly: "The past decade has produced vastly more social entrepreneurs than terrorists, but you would never know it by following the news."

That seems likely to change soon: Next fall, PBS will air the series New Heroes, which tells the stories of social entrepreneurs. The project was funded by the Skoll Foundation (started by eBay cofounder Jeffrey Skoll), which also has plans to bankroll a motion picture based on the life and work of Bill Strickland, a social entrepreneur who runs an arts program for kids and a job-training center for adults in inner-city Pittsburgh.

As you read the stories of these 20 groups, we think you will be filled with wonder. Their work - resourceful, daring, and often strikingly ambitious - evokes reverence for the spectacle of human invention and a soaring hope for what is possible.

The challenge for many of these groups now is to capitalize on the possibility they have created. For any of them to grow to massive scale, for their impact to be truly global, the methods for funding these types of endeavors will have to change. There is no nonprofit equivalent to an initial public offering - no foundation grant, individual donor, or government support that can equal what the free market supplies to innovative for-profit companies. Consider this fact from Bornstein's book: More than a third of the companies included in the Dow Jones Industrial Average today were added after 1990. Yet of the top 20 largest nonprofit service providers, not one was founded after 1980.

The names of these men and women and their organizations are not well known - yet. We think they will be some day soon. And we believe that institutions will emerge to truly leverage their ideas. For when history books reflect back on this century, Social Capitalists will be recognized as the architects of change, as catalysts who raised our expectations for the world, and of ourselves.